Posted on 08/13/2009 5:34:34 AM PDT by SeekAndFind
The version of Obamacare offered by the Senate Health, Education, Labor, and Pensions (HELP) Committee has a number of controversial provisions. Conspicuous among them is a proposed fine of as much as $1,000 a year on individuals who refuse to purchase health-insurance coverage as the bill mandates.
The antecedent of the individual mandate is the Massachusetts health-care reform of 2006. That measure — spearheaded by Republican then-governor Mitt Romney, and lauded by Ted Kennedy, who is now the chairman of the HELP Committee — contained a universal individual mandate to purchase state-approved insurance coverage. Or else what?
Romney had proposed a self-insurance option, whereby an individual could post a $10,000 bond to cover unanticipated medical costs. Liberal Democratic legislators rejected that option, leaving only a penalty for failure to enroll.
In 2008, Massachusetts started levying fines on non-compliers. The amount of the fine is half the cost of the premium of the cheapest approved plan in the person’s region of the state, up to approximately $1,000 a year.
The Obama-Kennedy individual mandate is perhaps the first attempt by the federal government to require individuals to buy a particular product, or suffer a fine.
The problem this measure aims to solve is real: People incur medical expenses that exceed their ability to pay, leaving others (medical providers, insured patients, taxpayers, and so on) holding the bag. However, there is a better way to deal with this problem.
The operative principle should be personal responsibility. The responsible thing to do is to buy health insurance to cover most of the costs of illness or injury.
Unfortunately, state governments have made health insurance unaffordable for many consumers. They have done this by piling on costly mandates, requiring guaranteed issue (applicants cannot be turned down because of a pre-existing health condition), imposing community rating (everyone in a particular region pays the same premium, regardless of personal history), and outlawing low-cost policies that have high deductibles or offer only catastrophic coverage.
Faced with the steep cost of insurance, many people — especially healthy young people — choose to go without. Fine — but if they then incur high medical expenses, they ought to accept the primary responsibility for paying for the services they have received.
Consider this proposal: If an uninsured person incurs medical expenses and leaves an unpaid balance, the provider must try for 90 days to collect. At that point the unpaid balance is posted to an account in the patient’s name, managed for the government by a credit-card company. Each year the account manager reports to the patient his or her balance, on the equivalent of an IRS 1099 form. When preparing that year’s taxes, the individual must include a stated fraction of that amount in his or her gross income. (The same result could be achieved with an inverse tax credit.)
The fraction reported would be graduated according to the patient’s income and the amount of the balance due. For a high-income taxpayer with a low account balance, the amount subject to tax the first year might be 100 percent of the balance. For a taxpayer with minimal income, the balance would carry over undiminished to the following year.
Thus the uninsured patient would be required to pay off the unpaid balance via income-tax payments year after year until it is retired. Whether the account balance would be adjusted upward annually to match the depreciation of the dollar, whether interest would be charged on the average balance, whether the IRS would have a claim on a decedent’s estate for the unpaid balance, and whether such liabilities would survive bankruptcy are questions for policymakers to decide. A further question is how much of the tax payment collected the government would deduct to cover administrative costs before remitting the remainder to the providers who weren’t paid for their services.
In sum, the proposal says to the person who prefers not to obtain insurance: “Your government will not fine you for failing to buy health insurance. But if you are unlucky enough to run up a big medical bill that you can’t pay from your assets, you will be paying a piece of it off every year at tax time, possibly for the rest of your life. Are you sure you wouldn’t prefer to invest in a high-deductible insurance policy with limited mandates, with a cap on out-of-pocket payments, and with your own tax-free Health Savings Account?”
It will be objected that it might be years — if ever — before an ordinary individual could pay off a large hospital bill through annual income-tax payments. That’s true. But the proposal at least fixes the economic responsibility for paying for services received upon the person benefiting from the services, and it sets up a virtually effort-free mechanism for paying.
To the extent the government returns the tax collections from this provision to the unpaid providers, the proposal will also reduce the otherwise unavoidable cost shift to insured patients via higher premiums.
This plan is a clear conceptual alternative to the government forcing every citizen to buy government-approved insurance. The uninsured patient will be spared an oppressive government mandate to buy coverage. But the patient will know that if he or she suddenly requires expensive medical care, the consequence of having failed to enroll in suitable coverage will be reduced after-tax income. That will emphasize that the unpaid bill remains the patient’s responsibility, not society’s.
No scheme is perfect. If expenses are incurred, somebody has to bear the burden. But by obviating the argument for an illiberal individual mandate, such an income-tax-based recapture plan has a lot to recommend it.
— John McClaughry is president of the Ethan Allen Institute in Vermont.
Personal responsibiity? What’s that?
Just gimmme my handouts, celebrate my bad behavior, and shut the —— up!
/s
The purpose of health insurance?
Health insurance is a financial tool with the purpose of protecting us from financial harm.
Health insurance is designed to protect our credit ratings and to keep us out of bankruptcy court.
Those who have no assets do not NEED health insurance, in many cases.
Access to health care has very little to do with health insurance!
it may be illegal to fine citizens for not buying insurance....
what do they do to people who cant pay the fine?
Another cash for clunkers program!
hahhahaa...
You know, that is an area of concern that deserves its own TV advertising:
“Would you RATHER negotiate with a hospital, and work out a payment plan, or would you RATHER negotiate with the IRS?
Would you rather have the option of bankruptcy court, if you can’t pay a medical bill, or would you RATHER deal with the IRS?”
(Make no mistake, the IRS is given the power to enforce many of the “premium” mandates, in the House Bill.)
It violates the Contracts Clause of the 13th Amendment. RE: Reynolds vs The United States. Which established the “wheel of servitude” is violated when the government coerces a citizen into entering into a contract.
One works 80 hours, saves his money, pays his bills and others.
The other studies Zero's polices and is given 100,000 of dollars in Mortgage relief and continues on his merry way.
Why does neighbor a get punished for success , Mr. Zero?
I agree with your theory and take it a step more by saying to those who say I am being selfish:
I do not wish to pay your mortgage; college education; credit card debt; vehicle purchase; and or health care.
The entire notion of “responsiblity” seems to have been over written by politicians who want to feel good by giving away my hard earned assets.
But under this plan by Obama, if I were to drop my insurance altogether I would be fined $1000 a year. That's about $95 a month? Big deal. But the savings would be more than 10 times that amount.
Now here's the clincher. If I were to suddenly contract some life threatening and expensive illness, under Obama's plan, I could immediately apply for insurance AND NOBODY COULD TURN ME DOWN! So I get a $200 test which tells me I have prostrate cancer or I need a lung transplant and THEN I get insurance and get the treatment for free. So after I come down with this expensive medical condition I would pay maybe $3000 a year for this medical insurance (because Insurance companies are prohibited from charging a newly enrolled cancer patient any more than they would charge a non-smoking marathon running vegetarian.) And then after my condition stabilizes, I just cancel my policy until the next life threatening condition befalls me.
Frankly if this passes I am seriously considering telling my employer to just drop my insurance and give me the money he is paying into the system and I will pay the fines.
If I can manage to stave off serious illness for the next 10 years, then I can bank about $120,000 which should cover my health insurance premiums for the next 25 years should I come down with some condition which I personally could not afford to pay and feel the need to be insured again.
Ah, the law of unintended consequences.
I suspect that if this measure passes the number of "uninsured" will triple. I will voluntarily join the ranks of the "uninsured" because under the Obama plan the uninsured really are just as "insured" as those who are stupid enough to actually choose to pay health care premiums.
This unbridled ability to get coverage for your pre-existing conditions is like being able to buy auto insurance AFTER you crash your car and AFTER some lawyer hands you a summons.
Ain't America great?
Here is a question: my wife has a chronic illness (MS). Right now, if I were self-employed, I could not get health insurance for her at any cost. And her illness, though chronic, is probably smaller compared to other folks’ (people who have advanced Parkinsons’, etc).
Right now I have to stay employed by a company to get insurance to cover health costs.
What is a reasonable alternative to be able to pay for her medical care (when necessary) that would be viable to other Americans in the same boat (pre-existing, chronic, not likely to be cured)?
This is the sort of tough situation that, in the absence of a reasonable private sector solution, drives people to look to the gov for answers.
I think the answer is that health care is unaffordable due to two things: over-demand and fear of lawsuits. We need to remove the “go to the doc for every hangnail and only pay $20” fast-food approach - either make every standard office visit out-of-pocket or nurture a new type first-line care providers (not doctors).
As for tort reform - has it worked in any state? Are there any states that have tried and and seen health costs go down (rise more slowly) as a result?
Feel free to jump in on any point above. these are honest questions - I am just trying to think the issues through.
When I was born in 1946 my father wrote out a check to the hospital and doctor for not only my birth, but for my twin brother as well.
As we grew up mother would take us to the doctor and pay that bill each time by check.
The Doctor did not have malpractice insurance, the bills were actually given to and paid by mom. Each item was clearly priced, identified, and justified on the bill.
Most importantly, the doctor and hospital were not “terrified” by our out of control legal system.
Back then, the laws of supply and demand pertained and the price for medical care was fair and just.
What happened? A very simple answer...INSURANCE. Deep pockets were here to stay.
People pay outrageous amounts for insurance of all types. In turn, the “deep pocket” insurance companies pay legal and medical charges and suits without question and then force the need for the businesses and citizens of this country to “need” insurance to protect themselves against financial disaster. Insurance companies don’t have to worry about rising legal and medical charges and suits, they simply raise the cost for their product (plus a little extra kicker for extra profit) and force the public to pay for it.
It’s a loop...Insurance-doctors/lawyers-Insurance.
Why do you think Tort reform and term limits have not (and will not) occur? The answer is that our whole corrupt government is in on the take in one way or another. “One hand washes the other” and that what makes all insurance “robbery on the installment plan.”
It seems pretty simple to me.
Once you’re able to take care of your family’s needs as your first responsibility,
if you think that someone else is in need and is deserving of help with their medical insurance premiums,
PAY THEM YOURSELF.
This concept INFURIATES libs that I’ve proposed it to.
To quote Morton Blackwell, “you can’t beat a plan with no plan.”
If your goal is universal coverage (excluding illegals), then all you hvae to do is take a page from auto insurance and establish an “assigned risk” pool. Done.
Expand the tax credit that employers get for bying insurance for emplyees to individuals and to other kinds of groups — lodges, churches, etc.
Require that all companies offer catastrophic-only policies as well as comprehensive policies.
Allow the purchase of insurance across state lines.
Make HSAs work like IRAs.
Waive antitrust in just two areas: 1. Allow small businesses (even in the same field, such as all the hardware stores in a given area) to join together to buy insurance; 2. Allow hospitals in a given area to combine to purchase the most expensive kinds of equipment.
Limit damages in malpractice cases to a specific multiple (say two or three) of atual damages. (This lowers the cost of doctors’ malpractice insurance.) Also, implement loser pays laws.
What other ideas should we include?
You’ve covered it.
Pretty much all those reforms were instituted by the state of Texas and it reduced the costs 30%, reduced insurance premiums 30%,
and caused insurance companies and DOCTORS to FLOOD into Texas.
Those points are what the GOP should be offering as the proven solution to the STATED problems that the ‘rats are trying to “solve”.
We know the truth though - they aren’t trying to solve anything, they are trying to CONTROL everything.
Great analysis.
However, there is still the problem of rationed care whether you were in the plan or just joined.
Yeah, but under MY PLAN, I will have $120,000 in my own bank account which (knowing human nature as I do) should move me to the front of just about any rationing line. ;-)
Hospitals don’t have hit squads that go and kill people who don’t pay up. The IRS on the other hand...
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